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Joseph, Lawyer

Category: Legal

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Experience: Attorney with significant and substantial experience in multiple areas of law.

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My company had a subcontract with a large prime contractor

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My company had a subcontract with a large prime contractor for a state agency in Maryland. The contract was cost plus fixed fee. As a small company without an audited overhead the state assigned us 100% overhead. In late 2011 the state advised all contractors that they must conduct an independent overhead audit. We did so and it supported an overhead of 126.2% and was approved by the state. Further, the state agency sent e-mail in late April 2012 authorizing our company to bill a specific dollar amount to recover the added overhead and fee. We submitted an invoice for that amount to our prime in May 2012 and go no response to many requests for status. In June 2013 the prime told us that the state would not pay because the contract ended in April 2013. The prime told me that they attempted to bill the overhead in 2012 but could not come to an agreement with the state on how to do so therefore they never sent our invoice to the state and never advised us. Meanwhile we had two other overhead claims settled with other prime contractors with the same state agency. Do we have a legal claim against the prime for failing to exercise due diligence in billing our overhead to the state?

Actually, the concept of due diligence doesn't apply in this situation. That is associated with business deals and other investigations prior to coming up with a decision.

In your case, however, you would have a valid cause of action for negligence and/or breach of contract against the prime contractor for failing to send your bill to the state and failing to inform you about the status of your claim.

Since your prime was obligated by the state and your contract to pay you the additional amount of overheard, you would have a cause of action for breach of contract for them to failure to honor their contractual obligation to you.

Furthermore, since you had a business relationship with you, they were obligated to exercise a reasonable duty of care toward you in their business dealings. They failed to do so by negligently not submitting your claim to the state and failing to inform you about the status, possibly allowing you the potential to submit the claim yourself.

So, you would be able to maintain a cause of action for negligence and breach of contract against the prime contractor.

I hope the above information is helpful.

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There are two types of arrangements with attorneys for these types of cases.

You would either pay hourly or on a commission basis. Typical hourly rates can be anywhere from $200-$500 dollars, so it can be quite costly to hire an attorney on an hourly basis. (You would also normally be responsible for fees as well).

The other option is a contingency, where the attorney would take a percentage (normally 33%) off of any winnings from the case due to a settlement or a verdict in your favor.

I typically suggest contingency arrangements over hourly fees, since in addition to there being no upfront cost, it provides an incentive for the attorney to obtain the best possible outcome for your case.

I will tell you that...the things you have to go through to be an Expert are quite rigorous.

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